Knowledge sourcing, geopolitics, and FDI : An empirical analysis on the US green and digital sectors
FDI helps US firms absorb foreign knowledge, but benefits in green tech shrink with geopolitical distance while digital tech rewards targeted, innovative investments.
Summary
The study finds that foreign direct investment remains a channel through which US firms absorb foreign expertise, but how well it works depends on the sector, the entry mode and geopolitics. In green technology, the knowledge benefits fall as the investor's home country is geopolitically more distant from the US, or as political risk rises. In digital technology, small or generic investments yield little, while targeted, innovative acquisitions work best.
Editor's opinion
Investing abroad to gain knowledge is no longer a matter of money alone: in green technology the payoff shrinks as geopolitical distance grows, and in digital technology only targeted, innovative acquisitions deliver, while small or generic stakes add little. Where and how a firm invests for knowledge should be chosen together with the political relationship between the home and target countries.
Key concepts
FDI · knowledge sourcing · geopolitics · green technology · digital technology